NCPA - National Center for Policy Analysis

Frantic For Workers

June 30, 1999

What happens when labor markets get so tight there is barely a potential worker to be found anywhere? Look for the answer in Minnesota, where unemployment plunged to a seasonally adjusted 2.1 percent in March -- the lowest in the nation. And the state's labor pool is growing at only half the rate it did in the 1970s.

Then focus in on St. Paul and Minneapolis, where unemployment hit an all-time low of 1.6 percent in April.

These conditions are generating some interesting economic responses.

  • Business groups are putting up billboards urging the state's workers to stay put, as well as billboards in California urging workers to "upgrade to Minnesota" -- a plea that is falling on deaf ears due, in part, to Minnesota's high income taxes.
  • Department stores are using their loudspeakers to announce job openings and some firms have even started using prison labor.
  • Union power is being eroded as workers make it clear they don't need unions when employers are already showering them with thick wage-and-benefits packages -- and new hires are getting substantial bonuses.
  • So to keep building sites fully staffed, unions are strengthening their apprenticeship programs.

Economists in Minnesota are beginning to worry that the job market may remain just as tight for as long as the next ten years.

Source: "Land of 1,000 Opportunities," Economist, May 29, 1999.


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